Cryptocurrency has taken the world by storm and its impact is getting greater every day. The current trends show that Bitcoin has over two times more of Brazilian investors than combined investments in their treasury notes and the stock market.
What is the impact of cryptocurrency in Brazil?
There is a significant drop in São Paulo Stock Exchange ever since bitcoin took over. Over 1.4 million tax IDs have been registered by the end of 2017 in Brazil’s BTC exchanges – Bitcoin To You and Mercado Bitcoin. The figure is two times compared to 619,000 people who registered in B3. Apparently, there are more bitcoin traders in Brazil who trade offline or use foreign exchanges.
According to the owners of cryptocurrency exchanges, the response has been humongous. Rodrigo Batista, CEO of Mercado Bitcoin states that the variable between exchanges exhibits the value of bitcoin. They made 750,000 customers in 2017 with almost a leap of 275% compared to 2016. André Horta, the co-founder of Bitcoin to You, said that the fall of profitability in other exchanges is the result of more investments in bitcoin. They currently serve more than 300,000 investors.
How to keep up the demand?
With a flood of investors spending on bitcoin in Brazil, there were reports of deteriorating client service. Mercado Bitcoin now gets an average of 5,000 registrations every day, which was at the most of 500, at the beginning of 2017. The companies are expanding and trying to cope up with the current trend to give the maximum user experience to the investors.
The bitcoin companies have an estimate of growing by 3.5 times this year, and more by the following years. They need to strengthen their IT systems and have more staff to manage work. Bitcoin To You have four times more people, and had only 40 people working for them last year.
The São Paulo-based Foxbit had got 350,000 registrations but had to suspend services for new investors by mid-December 2017. The volume went by five times according to Guto Schiavon, the co-founder of Foxbit. The staff of their company rose by 20 people from 40 to 60 by the end of 2017. They had 15 more people by January 2018, and the numbers are ever-increasing. The companies have to be on their toes at every moment to make the most of the profit.
Why is Brazil investing in cryptocurrency?
An interesting reason why Brazilian investors are spending on bitcoin is the value. The currency doubles for the country as bitcoin is valued in USD. Brazil has also seen political turmoil like the Car Wash scandal. It gives them an idea that investing in USD is reliable.
This year, Brazil elections will likely end the 16 years of authority by the PMDB and PT political parties. The legal ineligibility of these politicians had brought in scams like Car Wash, so there is an assumption of a huge change. However, the expectation of a having a favorable market with the new administration is not definite. Moreover, the leftist applicant Lula is leading the polls till now. There are chances of Lula not getting through to presidency in 2018, due to the Car Wash corruption. However, the markets fret that another leftist candidate might take over. According to recent polls, an applicant appointed by Lula might convert a huge number of his own votes.
Current Market Scenario
The political tension is one of the vital factors that make Brazilians oppose the Real. Bitcoin now seems to be more appealing to the Brazilian investors as it is anchored to USD in Brazilian exchanges. The interest rates of the Central Bank in Brazil have gone to the lowest level in decades. The traditional ways of investment have become stagnant. Thus, cryptocurrency took over in Brazil due to these reasons.
Complicated rules and bureaucracy are two more reasons that boost cryptocurrency in Brazil. Most investors want to avoid the complex economic system of the country. For example, it takes almost 3 months to open a small organization in Brazil and years to stop LLC. Work allowance for small organizations needs to go through several regulations. Many companies have migrated to Uruguay, Paraguay, among other market-friendly countries due to these conditions.
Xceltrip Brazil has invested in cryptocurrency at the right time and is experiencing a steady growth. It is sure that more and more Brazilians will move to bitcoin as it has clear returns and is worth the price paid.